Page 5 - MEOG Week 27 2022
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MEOG COMMENTARY MEOG
been able to take advantage of the domestic account for 10% of Iran’s planned output capac-
financial capacities in the oil industry,” he said. ity of 5.7mn bpd by 2030, up from the current
“This is despite the fact that our country has level of 3.8mn bpd.
the second-largest gas reserves in the world,
while supply of petroleum products has devel- Competing on price
oped tantamount to consumption growth, so we Given the challenges of finding buyers for its
should think about increasing the production crude, Iran will likely have to compete aggres-
capacity of petroleum products in the country,” sively on price and signs of this have emerged
Owji added. already.
Ramping up capacity in oil and gas, refin- Speaking to Bloomberg this week, traders
ing and petrochemicals is key to Iran’s recovery said that Iranian crude has been priced almost
from years of sanctions, but without the removal $10 per barrel lower than Brent futures to ensure
of restrictions on foreign investors taking part parity with Russian Urals cargoes scheduled
in the sector, the large sums of money required for August delivery to China. The discount has
may prove hard to come by. roughly doubled since the beginning of the
“We are not going to provide all the $160bn conflict in Ukraine and data from Kpler shows
of investment required in the upstream and increased volumes of Russian crude sales to
downstream sectors in the next eight years from China putting downward pressure on cargoes
domestic sources, but at least a major part of from Iran, Angola and Congo (Brazzaville).
this investment can be provided from domestic The report quoted Vandana Hari, founder of
capacities,” Owji said. Vanda Insights, as saying: “The only competition
For Azadegan, the Ministry of Petroleum between Iranian and Russian barrels may end
(MoP) plans to attract around $4.5bn in foreign up being in China, which would work entirely
capital – in addition to the $7bn of local funds – to Beijing’s advantage. This is also likely to make
with the removal of sanctions in two investment the Gulf producers uneasy, seeing their prized
packages, akin to what was being offered before markets taken over by heavily discounted crude.”
Trump-era sanctions in 2018. As Iran fights for market share, across the
“Two attractive investment packages in the Gulf, Saudi Arabia and the UAE have increased
upstream and downstream sectors have been their official selling prices as Chinese demand
prepared for foreign investors, which we hope rebounds following the country’s continued bat-
will lead to a contract soon.” tle with the coronavirus (COVID-19) pandemic.
The investment figure is around $500mn More production from Iran will certainly
lower than that announced in May by National support its economic recovery, however, as the
Iranian Oil Co. (NIOC) CEO Mohsen Kho- OPEC+ group expands output, Tehran’s bat-
jastehmehr around the same time Zobeidi first tle for market share in Asia will become more
announced the 570,000 bpd target. entrenched, unless a deal is reached that would
Once this level is reached, Azadegan will see sanctions reduced or removed.
Week 27 06•July•2022 www. NEWSBASE .com P5
